HH: Joined now by Jonathan Chait of the New Republic, who will be watching the President’s State of the Union address with a great deal of interest. He’s been blogging over at his brand new blog at the New Republic about health care not being dead yet. Jonathan, you’re beginning to strike me as the shopkeeper in Monty Python presented with the dead parrot, and you keep saying it’s not dead, it’s merely stunned.

JC: Yeah, you know, people were saying the same thing back in the summer, that said we had these town halls, it was dead, it was dead, it was dead. And then all of a sudden, they got it on the fast track, and pretty quickly went to something that even partisan Republicans admitted was all but a fait accompli, and then had this kind of stunner in Massachusetts that have knocked people off their bearings. But if you look at the fundamentals of the situation, they’re so close to passing it, and the hardest part is all behind them, both politically and procedurally. So it’s pretty easy for them to pass it, and I think they have every reason to. So my assumption is that politicians usually do what’s in their interest, and in this case, it’s clearly in their interest to do it. So they probably will. I didn’t say, I’m not certain they will. I just think it’s better than even odds that they will.

HH: A proposition for you, that they’re all positioning so they don’t get blamed for killing it. They’re trying to lay the blame in the House off on the Senate. And what I’d love to see you write about, because I just don’t know what your answer is to this, what about Bart Stupak and his 12 Democrats who say no, we are not going to vote for the Senate bill, and probably that number is higher now, Jon?

JC: I don’t think it is higher. That is…I’ve heard it’s more like eight to ten who they’re going to lose on abortion, and who supported the first bill. But you’ve also got another pretty big chunk of Democrats who voted against it the first time, many of them said that they preferred the Senate version of the bill, and would have voted for something more like the Senate bill. So now what they’re being asked to do is to actually approve the Senate bill.

HH: Can you point me to any list of eight or nine, let’s go with your number…

JC: Yeah.

HH: …eight or nine Democrats who voted against Obamacare in the House who are willing to go on record as saying they’re open to voting for it now?

JC: None of them are, you know, again, some of them said so the first time around. They said they’re voting against it, but they preferred the Senate bill. None of them are going to say that now, because they number one, lose all leverage, and number two, politically expose themselves if it doesn’t actually happen. You know, the way these things normally go, and I’m sure you’ve seen enough votes to see how it is, and in situations like this, they usually hold off until the very end when the vote’s going to happen, and then they kind of give enough votes for the measure to pass. The House is almost never the institution that stops the President when controlled by the same party from getting his agenda through.

HH: Well, I will continue to read Jonathan Chait’s blog daily to see a list of even four Democrats who are willing to say they’re considering voting for it when they voted against it right now, because that’s like signing a suicide note for a politician right now. But Jonathan…

JC: Oh, sure, to say that, of course they’re not going to say that.

HH: Yeah, that’s why I think it’s all just puffle what you guys are saying, and I think the President will posture tonight, and I think you guys are posturing to try and preserve it, and you’re trying to blame Evan Bayh, and I’m glad for that, because we can beat Evan Bayh in the fall.

JC: Oh, I’m not blaming Evan Bayh. I don’t think Evan Bayh’s the problem. And if it does go down, I don’t think Evan Bayh will be the problem.

HH: Then who will be the problem if it does go down?

JC: I think the biggest problem I see right now is mistrust between the House and the Senate, especially the mistrust of the Senate by the House, in just the inability to kind of work together, and frankly, I think, a failure of leadership by the Obama administration. I think they’ve had their worst moments of the presidency by far in the last week, and I have to be honest that it’s really shaken my confidence in their ability to respond to a crisis, because they’ve had a real crisis here, and they’ve just allowed the rest of the Democrats in Congress to succumb to panic. And I think to some issue, they have themselves.

HH: I think they’ve shattered their ability to lead beyond repair, but that makes me happy, probably makes you said.

JC: Well, I don’t say no plan. The health care bill does do quite a bit to control the deficit, much more than, you know, we’ve seen from any politician since the 1993 deficit reduction act that President Clinton and the Democrats passed.

HH: And given that it’s now dead on arrival, or that it’s stuck there, the President is going to propose a spending freeze tonight…

JC: Right.

HH: And that will not stop this deficit, Jonathan.

JC: No, you’re right. It won’t. It’s a very, very small measure.

HH: Are you prepared…are you prepared to admit we cannot spend this kind of money, and the Democrats seem incapable of taking serious action on this?

JC: No, I don’t think that’s a fair characterization. I think you’ve had Democrats who have made pretty significant efforts to reduce the deficit when they’ve had power, and you’ve had Republicans doing enormous, massive damage to the fiscal bottom line. And the Democrats’ ability to bail the water out of the boat is dwarfed by the Republicans’ ability to let more water come in.

HH: Do you think that’s going to persuade anybody that the deficit is the Republicans’ fault, when the last deficit under George Bush was $161 billion before the panic, and the first deficit for Obama after the panic is $1.35 trillion? Do you think anyone buys that, Jon?

JC: Oh, I think people who play close attention to fiscal policy will buy it, but that’s a very small minority of the country. So do I think it’s going to persuade a majority of the public? No, only people who pay close attention, because it’s obviously and absolutely true that the increase in the deficit has been due to several factors that dwarf everything else. In terms of the deficit after the first couple of years, when they’re deliberately trying to increase the deficit in order to stimulate the economy, but I’m talking about the permanent increase…

HH: The permanent structural $1.35 trillion dollar deficit, which is…

JC: Right, the structural increases that we’re seeing in the years after the stimulus wears away are overwhelmingly due to a couple of things. Number one, you’ve got the economy collapsing, right? So this causes expenditures to rise, and revenues to drop automatically. In terms of policy, it’s adding to it…it’s actually 100% George W. Bush’s policies. 100%.

HH: (laughing) Jon, I want you to argue that for the rest of the year, because the American people, you quotes Peter Hart…

JC: Which Obama policies add to the long term deficit? Name me one.

HH: You quoted…they won’t cut any spending. They continue to spend like drunken sailors. Everything went up.

JC: Name an Obama policy that’s adding to the long term deficit. Name one that’s adding to the long term deficit.

HH: All right, here’s one – the $787 billion dollar stimulus plan is actually going to cost, I believe the number was $50 billion more than advertised, because they miscalculated what was the unemployment rate going to be. Instead of 8%, it became 10%. Therefore, their calculations were wrong. Therefore, the deficit went up $50 billion dollars. I think that was announced today, Jon.

JC: That’s not because of the stimulus. That’s because higher unemployment leads to higher spending…

HH: Oh no, no, no. If you write a bill that says we’re going to pay higher unemployment benefits based on 8%…

JC: Right.

HH: …and you’re wrong, you screwed up the bill. That’s the Obama…

JC: Okay, you’re right, but unemployment benefits are part, I mean, they are estimated before the stimulus.

HH: Wait a minute.

JC: In any case, that’s not long term spending.

HH: Did you just say you’re right?

JC: That’s not long term spending. I said long term spending, something after the…

HH: Wait, wait. But did you just say you’re right to me?

JC: Yeah.

HH: You did.

JC: No, you’re totally wrong. You have not brought up a policy…

HH: Well no, you just a minute ago, you said I was right. I just wanted to pause and reflect. That may be the first time in five years.

JC: My question to you is name something that will increase the long term deficit that Obama has done.

HH: Let me explain this to you, because you’re a University of Michigan grad, so I may have to go slow.

JC: Yeah.

HH: When you add $50 billion dollars to the deficit, and you don’t pay it off, interest is owed on that every single year going forward.

JC: You’re right. Okay, you’re right. There are some interest costs associated with, that are going to be some permanent. They’re very, very tiny. You’re talking about increasing the amount that we’re spending on long term interest by a couple percent.

HH: That’s just, you asked for an example, I gave you one.

JC: Okay.

HH: There are thousands of examples. They raised spending in every category.

JC: That’s tiny. That’s tiny. That’s a few billion dollars.

HH: But they did it in every single category across the fiscal appropriations process last year…

JC: No, they didn’t. You’re only talking…

HH: They raised, go back…

JC: The only example you have of Obama adding to the long term deficit is the increased interest costs from the deficit after it expires. That’s your only example, and it’s a few billion dollars.

HH: Here’s a second one. $161 billion dollar deficit before TARP, $1.35 trillion dollar deficit after TARP? Something happened in between. It’s called a Democratic budget. It’s not TARP. It wasn’t the stimulus. That’s structural increases in spending that he approved, that he signed, and that the Democratic Congress passed. You get the last minute, Jon. Why isn’t that the Democrats’ responsibility?

JC: No, those were automatic spending that was already in the budget. If you look at the huge increases in policy spending, you’ve got the wars in Iraq and Afghanistan, which are themselves much larger than the stimulus, you’ve got the Bush tax cuts, and you’ve got the Bush Medicare benefit, all of which were 100% financed by deficit spending. Unlike health care, which they’re actually paying for, they made no effort whatsoever.

HH: Jon, we’ll continue the conversation. People can read about it at www.tnr.com. Look for Jonathan Chait’s blog.